The euro, which until last week was rallying against currencies like the greenback and the yen, started this week losing versus virtually all majors, after speculations that European Union officials will reaffirm that the recession is far from being over.
The euro entered a downtrend since last Friday when concerns rose amid traders that the global slump is still very vivid and further measures will eventually be taken by the European Central Bank in order to stimulate the bloc’s economy. The Luxembourg Finance Minster Jean-Claude Juncker stated this Monday at an Eurozone member countries meeting in Brussels that Europe is still passing through the crisis, sparking immediate speculations in markets regarding the future of European economies, resulting in a negative day in equities and currencies markets throughout the old continent. The euro lost the most against the yen, being the latter often associated as a refuge when risk aversion climbs.
An unanimous opinion among traders and economists stress on the fact that the European Central Bank policy makers aren’t confident in a fast economic recovery in the bloc, which will certainly lead to further measures to be taken in Brussels to stimulate the contracting financial scenario in most of Eurozone countries. If risk aversion continues to climb, we will be likely to see a significant bearish outlook for the euro.
EUR/USD traded at 1.3924 as of 8:57 GMT after bottoming at 1.3875 yesterday and from an week opening price of 1.3975. EUR/JPY followed, trading at 132.55 from an opening price this week of 133.80.
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